To The Moon

1. China’s central bank injected $112 billion of liquidity to support the economy.

The People’s Bank of China (PBoC) during its monthly rebalancing of its medium-term lending facility (MLF) added RMB 1.45 trillion ($112 billion) in liquidity to the system. The medium-term policy loans doled out to financial institutions will carry an interest rate of 2.50%, unchanged from the previous month. But the amount of new liquidity is the largest of its kind for the MLF and likely a result of growing concern about economic growth stalling following weak inflation and loan creation data. Without a matching cut in interest rates, the impact of this new liquidity may not be substantial as business sentiment continues to be weak. $Global X China Financials ETF(CHIX)$

2. The Chinese government approved a 3% target for next year’s budget deficit.

Beijing is eyeing a reduction in its annual budget deficit next year to 3% from an expected 3.8% this year. The decision to tighten spending reflects the government’s cautious approach when it comes to dealing with economic challenges, which are in many ways also debt-related. However, Beijing is leaving the option open for up to RMB 1 trillion ($140 billion) in special government bonds to be issued in case there is a need for additional spending or stimulus. This does not include up to another RMB 4 trillion in local government bond issuances, slightly higher than this year’s total. Local government financing vehicles need this to continue financing projects necessary to achieve economic goals. $KraneShares Bosera MSCI China A 50 Connect Index ETF(KBA)$ $iShares MSCI China ETF(MCHI)$ $iShares MSCI China A ETF(CNYA)$

3. Electricity consumption in China surged 11.6% in November.

China’s total electricity consumption grew 11.6% in November to reach 763 billion kWh according to the National Energy Administration. That’s an acceleration from the 8.6% growth in October, indicating recovery in manufacturing as well as seasonal demand uptick as winter season begins. November power consumption is also 2.8% higher than the October figure and consumption is expected to continue rising into the New Year. Rising power demand in China typically results in stronger demand for coal and natural gas. $China Gas Holdings Ltd.(CGHLY)$ $YANKUANG ENERGY GROUP CO LTD.(YZCHF)$ $China Coal Energy Co., Ltd.(CCOZY)$

4. China’s retail sales grew less than expected in November despite low base effect.

Consumers in China spent 10.1% more in November on retail purchases compared with the same month a year ago. The growth lagged market expectations of a 12.5% increase. Excluding the fast-growing automobiles sector, retail sales of consumer goods grew by 9.6%. The weaker-than-expected November growth figure is despite retail sales declining more than 5% in November 2022 due to the impact of COVID-related measures in China. However, industrial output grew 6.6% last month, a full 100 basis points higher than expectations and much faster than the 4.6% growth in October. There’s sequential improvement in growth in retail and industrial sectors but the recovery’s sustainability is still in question. $Alibaba(BABA)$ $Alibaba(09988)$ $JD.com(JD)$ $JD-SW(09618)$ $Pinduoduo Inc.(PDD)$ $Bilibili Inc.(BILI)$ $BILIBILI-W(09626)$ $MEITUAN-W(03690)$ $MEITUAN(MPNGF)$ $Global X China Consumer ETF(CHIQ)$

5. US Treasury Secretary Janet Yellen renews calls to stabilize US-China relationship.

Secretary Yellen is planning a second trip to China as head of the US Treasury, while seeking to find avenues of cooperation with Beijing in less politically sensitive areas such as climate and money laundering. However, she also plans to pressure Beijing about its economic policies, including the oversized role state-owned corporations have on the world’s 2nd largest economy. At the same time, the US Treasury announced rules for subsidies in clean energy manufacturing that takes direct aim at Chinese exports of solar panels and EV batteries. $JinkoSolar(JKS)$ $Sunrun(RUN)$ $BYD Co., Ltd.(BYDDF)$ $BYD COMPANY(01211)$

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